Semi-Retirement of a Salesman - Weldon to Retire as Johnson and Johnson CEO

The extremely well compensated CEO and Chairman of Johnson and Johnson, the huge and recently hugely troubled US based pharmaceutical and device company, is going to retire, at least as CEO.  Reporting on this event may shed a little more light on the sorts of leadership problems that now commonly afflict health care organizations.

The Credo

Johnson and Johnson was once one of the US' most respected companies.  Its credo, written in 1943 by Robert Wood Johnson, bravely begins:

We believe our first responsibility is to doctors, nurses and patients, to mothers and fathers, and all others who use our products and services. In meeting their needs, everything we do must be of high quality.

Dishonoring the Credo

Yet in the last few years the company has not honored this credo.

It seems to have lost the ability to manufacture high quality products. It has had to make 30 separate product recalls since 2009. The latest was Liquid Infant Tylenol. (The current WSJ Health Blog list of recalls can be found here.)

Johnson and Johnson also has an amazing recent record of ethical lapses and guilty pleas, including:
- Convictions in two different states in 2010 for misleading marketing of Risperdal
- A guilty plea for misbranding Topamax in 2010
- Guilty pleas to bribery in Europe in 2011 by J+J's DePuy subsidiary
- A guilty plea for marketing Risperdal for unapproved uses in 2011 (see this link for all of the above)
- Accusations that the company, which makes smoking cessation products, participated along with tobacco companies in efforts to lobby state legislators (see post here)
- A guilty plea to misbranding Natrecor by J+J subsidiary Scios (see post here)
-  Most recently, in 2012, testimony in a trial of allegations of unethical marketing of the drug Respirdal (risperidone) by the Janssen subsidiary revealed a systemic, deceptive stealth marketing campaign that fostered suppression of research whose results were unfavorable to the company, ghostwriting, the use of key opinion leaders as marketers in the guise of academics and professionals, and intimidation of whistleblowers.  After these revelations, the company abruptly settled the case (see post here).

Disconnect Between Leadership Performance and Rewards

Nonetheless, until very recently, the top leadership of the company continued to collect outrageous compensation, and to be regarded as a font of health care wisdom, even by the current US administration.

In 2010, the company gave CEO and Chairman William Weldon over $29 million in compensation, saying he "met expectations," (see this post).

In 2011, just days after the company pleaded guilty in the Risperdal marketing case (above), CEO and Chairman Weldon was invited to the White House to discuss health care (see this post.)

Just after his resignation was announced a few days ago, the Wall Street Journal reported that Weldon would get an increased bonus for 2011 ($3.1 million, up from $1.98 million in 2010), and an increased base salary ($1.97 million up from $1.92 million.)  His total compensation for 2011 was not yet revealed. 

Swapping One Salesman for Another

A single New York Times article suggested one reason why Weldon's reign was ultimately so unsuccessful, and perhaps why his successor may not do better.

Alex Gorsky, the newly named chief executive of Johnson & Johnson, shares a crucial biographical detail with William C. Weldon, the man he is succeeding. Both got their starts as pharmaceutical sales representatives, a notoriously grueling job that — because it demands stamina, charisma and a near devotion to making the sale — has become a crucible for future drug company executives in recent years.

Indeed, Mr Weldon's official biography indicates he "served in several sales, marketing and international management positions." The official biography of CEO-to-be, Alex Gorsky, stated he "began his Johnson & Johnson career as a sales representative with Janssen Pharmaceutica in 1988. Over the next 15 years, he advanced through positions of increasing responsibility in sales, marketing, and management." Previously, he earned "a Bachelor of Science degree from the U.S. Military Academy at West Point, N.Y., and spent six years in the U.S. Army, finishing his military career with the rank of Captain. Alex earned a Master of Business Administration degree from The Wharton School of the University of Pennsylvania in 1996."

Apparently neither current nor nominated CEO had any direct experience in patient care, nor in biomedical or clinical science, nor in chemistry, engineering or manufacturing. So both are generic managers, that is, health care leaders without any direct experience in health care, or in the science and technology underlying it.

"Making the Numbers" Versus the Credo

Moreover, they are both a particular type of generic manager, salespeople. As the Times reported:

Mr. Gorsky, who is 51, fits the mold of someone who once 'carried the bag' — industry slang for working as a sales representative. He is known as a polished speaker and an intense yet likable manager who is a quick study when it comes to learning new topics.

However, while sales people may be personable, they often have goals that have nothing to do with responsibilities "to doctors, nurses and patients, to mothers and fathers,...." As the Times article also noted,

But the ethos of the sales representative may not be what Johnson & Johnson needs right now, said Erik Gordon, who teaches business at the University of Michigan. 'That culture was very much the Weldon culture writ large — we will make our numbers for the analysts, period,' he said. 'And if that means we have to cut costs on things that affect quality, then by God, we’re going to make those numbers.'

So while Johnson and Johnson for years prided itself as a company that put the needs of patients and health professionals first, it hired leaders from the culture of sales where the impetus is to "make the numbers," to fulfill short term revenue goals, no matter what. This illustrates how generic management given perverse incentives in an era that honors greed and puts short-term economic goals ahead of all others had hollowed out health care.

We wish Mr Gorsky well, but worry that if he too focuses just on making the numbers, the result will be only mischief.

The Moral of the Story

Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.


If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

BLOGSCAN - Keeping the Echoes Alive

We frequently discuss the anechoic effect, how many of the cases and issues of interest to Health Care Renewal, which conversely may be troubling to the powers that be in health care, often fail to inspire as much discussion, or the echoes that they deserve, either in the "main-stream media," or in the medical and health care literature.  A new post on the 1BoringOldMan blog likened the anechoic effect to the "flooding" phenomenon seen in psychotherapy, basically how patients seek to change the subject when a particularly troubling issue comes up.  Furthermore, the semi-anonymous blogger, "Mickey," is hopping on our tiny bandwagon for those dedicated to keep these troubling topics from completely fading from public view. 

True or Not? Death By Deletion, Adventist Health System IT Whistleblower Patricia Moleski Speaks Out

Not sure what to make of this yet:

Whistleblower Patricia Moleski speaks out about health IT abuses - play at http://workmancompensationlawyers.net/12/23/death-by-deletion-adventist-health-system-it-whistleblower-patricia-moleski-speaks-out/

A former hospital IT worker claims very deliberate mass spoliation (e.g., deletion) of electronic medical record evidence to limit her (ex)-employer's liability for EHR-related medical malpractice on patients and injured workers who were entitled to workers compensation, as well as EHR defects.

She alleges that IT personnel are used as naïve accomplices to perform the spoliation acts. She grew suspicious when she was asked to delete nursing information about a patient who committed suicide by jumping out a hospital window after an EHR-related drug overdose.

The video is over an hour long and is worth listening to.

She made these claims to the FBI and alleged to have suffered retaliation including firing, and possible terroristic activities directed against her.

A Feb. 2010 letter to Gov. Crist, Sen. Grassley and many other government officials, a 9th Judicial Circuit court document for Orange County, FL (PDF), and other details - some scary - can be found via a google search on this person's name: https://www.google.com/search?q=Patricia%20Moleski .

A Feb. 2010 letter to Sen. Grassley, former Fla. Governor Crist, various other senators, news media, etc. alleging serious, systematic, purposeful HIT evidence tampering and erasure. Click to bring up full letter.

This could be the "Libby Zion" (or Bernard Madoff?) case of the health IT world if these allegations are true.

-- SS

Health IT Culture: Severe Overconfidence (Arrogance?) Shows In The Industry's Very Terminology For Their Deliverables

Health IT commentator Neil Versel notes in his piece "HIMSS12 notes" at his site Meaningful Health IT News that:

I am in 100 percent agreement with something Dr. Wendy Sue Swanson, a.k.a. Seattle Mama Doc, said during an engaging presentation Monday at the HIMSS/CHIME CIO Forum. She made the astute observation that there needs to be better distinction between expertise and merely experience when it comes to celebrities being held up as “experts” in healthcare and medicine. Let’s just say that Swanson, as a pediatrician, is no fan of some of the things Jenny McCarthy and Dr. Mehmet Oz have told wide audiences.

He posted a link to his piece in a social networking site we both visit. I commented:

To that, I add "healthcare IT" where it seems anyone who's done anything with a computer in some medical setting can get away with calling themselves a "medical informatics expert" or "health IT expert." As in ham radio levels of just a few years ago, we need distinctions between novice class, technician class, general class, advanced class, and extra class.

In his piece Neil also linked to what he correctly termed "scathing critique" of the venue for HIMSS 2012 at my HC Renewal post "HIMSS Annual Meeting in Las Vegas - Fitting for People Who Gamble With People's Lives to Make a Buck?"

I replied to him via the social networking site that:

"I like to point out ironies that seem to escape others, although I have heard from other colleagues that I was not alone in finding Las Vegas a somewhat peculiar place for a medical meeting about improving health! However, others' mileage may vary."

Neil noted that he likes pointing out ironies, too, and gave as an example as the meetings held at the Loews Hotel near Vanderbilt University Medical Center, being that Loews Hotels is a corporate cousin of Lorrilard Tobacco.

Finally, Neil comments:

Popular topics this year were the expected meaningful use and ICD-10, plus the buzzwords of the moment, business analytics and big data. I’d be happy I never hear the word “solution” as a synonym for “product” or “service” again. To me, that represents lazy marketing. Get yourself a thesaurus.

I agreed, and replied that:

"Solution", the common term in IT for anything an IT department or company provides, is a one-word example of a language usage akin to 'begging the question.'

This term, in one mere word, reflects a stunning arrogance within the IT culture.

I also noted that:

... there needs to be terminological consistency. If the IT vendors can call their wares "solutions", then doctors should call their treatments and drugs "cures." Come to my office for your cure; I am a curer; I write cures, not prescriptions.

I also noted that the term "meaningful use" phrase selected by the U.S. government/HHS for EHR adoption according to printed guidelines is another example of terminology that, ante hoc, assumes its semantics are correct.

How do we know the use is "meaningful" until such use is studied rigorously and outcomes, costs. etc. assessed?

Answer: we don't.

And this administration criticized the previous one for politicizing science ... George Orwell could not have selected better terms than "meaningful use", "certified EHR", and "solution" as examples of "Newspeak" in 1984.

-- SS

Three Facets of One Hospital: Coddling the Rich, Hounding the Poor, and Crooked Executives

Juxtaposing three news stories from the past few months raises disturbing questions about the priorities of the leaders of one of the US' more prestigious hospitals.

"Chefs, Butlers, Marble Baths: Hospitals Vie for the Affluent"

 This 21 January, 2012 article from the New York Times focused on the ritzy comforts now provided for wealthy (but perhaps not very sick) patients at the renowned New York Presbyterian/ Weill Cornell Hospital.  It opened,

The feverish patient had spent hours in a crowded emergency room. When she opened her eyes in her Manhattan hospital room last winter, she recalled later, she wondered if she could be hallucinating: 'This is like the Four Seasons — where am I?'

The bed linens were by Frette, Italian purveyors of high-thread-count sheets to popes and princes. The bathroom gleamed with polished marble. Huge windows displayed panoramic East River views. And in the hush of her $2,400 suite, a man in a black vest and tie proffered an elaborate menu and told her, 'I’ll be your butler.'

It was Greenberg 14 South, the elite wing on the new penthouse floor of NewYork-Presbyterian/Weill Cornell hospital. Pampering and décor to rival a grand hotel, if not a Downton Abbey, have long been the hallmark of such 'amenities units,' often hidden behind closed doors at New York’s premier hospitals. But the phenomenon is escalating here and around the country, health care design specialists say, part of an international competition for wealthy patients willing to pay extra, even as the federal government cuts back hospital reimbursement in pursuit of a more universal and affordable American medical system.

Additional amenities include:

A waterfall, a grand piano and the image of a giant orchid grace the soaring ninth floor atrium....

Also,

the visitors’ lounge seems to hang over the East River in a glass prow and Ciao Bella gelato is available on demand....

An architect who specializes in designing such luxury facilities for hospitals noted:

'These kinds of patients, they’re paying cash — they’re the best kind of patient to have,' she added. 'Theoretically, it trickles down.'

Note that the article also mentioned other hospitals which offered similar luxuries, including Johns Hopkins Hospital in Baltimore, Cedars-Sinai Medical Center in Los Angeles, and Mount Sinai Medical Center in New York.

On the other hand,....

Hounding the Poor for Payment While Getting Government Money for Indigent Care

On 12 February, the New York Times published an article about how New York Presbyterian/ Weill Cornell deals with patients with fewer resources than those discussed above:

For most of her life, Hope Rubel was a healthy woman with good medical insurance, an unblemished credit history and a solid career in graphic design. But on the day an ambulance rushed her to a Manhattan hospital emergency room shortly after her 48th birthday, she was jobless, uninsured and having a stroke.

Ms. Rubel’s medical problem was rare, a result of a benign tumor on her adrenal gland, but the financial consequences were not unusual. She depleted her savings to pay $17,000 for surgery to remove the tumor, and then watched, 'emotionally paralyzed,' she said, as $88,000 in additional hospital bills poured in. Eventually the hospital sued her for the money.

Yet that year the hospital, NewYork-Presbyterian/Weill Cornell, had already collected $50.2 million from the state’s so-called Indigent Care Pool to help care for people like Ms. Rubel who have no insurance and cannot pay their bills.

Note that the article also included other New York hospitals that allegedly used aggressive collection tactics on poor patients even though they too collected government money for indigent care. These included NYU Langone Medical Center and State University of New York Downstate Medical Center.

And one more...

Kickbacks for Hospital Executives

For some reason, the only media coverage of this story was not in New York, but by the Philadelphia Inquirer on 13 February, 2012.

The FBI said that ... [Michael Yaron] he received asbestos-removal and construction contracts at New York Presbyterian Hospital for two of his companies, Cambridge Environmental & Construction Corp. and Oxford Construction & Development Corp., because he paid about $2.3 million in kickbacks starting in 2000.

Neither Yaron, a resident of Meadowbrook, Montgomery County, nor his attorneys could be reached for comment yesterday. No one answered at Yaron Properties, his offices on Arch Street in Old City.

Bucks County native Moshe Buchnik, a president of two asbestos-abatement companies, was also convicted after the four-week trial. Santo Saglimbeni, a former vice president of facilities operations at the hospital, and Emilio 'Tony' Figueroa, a former director of facilities operations at the hospital, were also convicted. The FBI said the two former hospital employees steered contracts to Yaron and Buchnik in exchange for the kickbacks.

The Inquirer apparently covered the story because Yaron lives in Philadelphia. Thus it treated the convictions of a former vice president and former director of facilities operations at New York Presbyterian/ Weill Cornell Hospital as afterthoughts.

Summary

Thus, in the last six weeks, we have been treated to stories that showed how New York Presbyterian/ Weill Cornell Hospital has devoted substantial resources to create luxury suites for rich patients, presumably because they may pay cash; while simultaneously hounding poor patients who could not pay their large medical bills, even though the hospital was receiving government funds for indigent care; and until recently was employing some executives now shown to have abused their authority.

The themes of the three individual stories should be familiar.

The first story was a reminder that the very rich are different from you and me in how they interact with the health care system. In many ways, the rich and powerful - some might call them the one percent - are personally protected from various aspects of health care dysfunction. For example, here we have discussed how wealthy executives seem to be able to obtain health insurance with benefits unheard of by the more common folk, and here we discussed how the wealthy and influential may get preferential hospital treatment. Thus, even one percenters who are not otherwise involved in health care may not be inclined to lend their support to any efforts to really reform the system.

Aggressive bill collection practices by hospitals which are supposed to serve the poor are also old news. We first discussed such practices occurring in New York City in 2004 - yes, this blog is that old. We also discussed such practices in Baltimore in 2008. Such practices are an example of mission-hostile management.

Finally, we have commented many times about misbehavior by health care executives, and discussed examples of fraud, kickbacks, and health care corruption. It has been unusual, however, for individual executives to actually suffer negative consequences when they induce systemic misbehavior in their organizations. Instead, the results are often legal settlements that only lead to financial penalties on the organizations that are no more than costs of doing business.

However, the juxtaposition of stories that a hospital has been coddling the rich, and simultaneously hounding the poor while it was lead by at least a few criminal executives is unusual. One would think that they should lead to an in-depth look at the leadership and governance of the institution in question, perhaps even to some reform of same. (By the way, one area of interest to such an investigation should be the presence of several former and current leaders of some of the failed financial firms that lead us into the global financial crisis or great recession on the board of that hospital, as we discussed here and here.)

However, so far I seem to be only one to note the inter-relationships of these stories, and their implications, while obvious, therefore remain anechoic.

So I get to repeat.... Health care organizations need leadership that understands, and knowledgeably upholds the organizations' missions and patients and the public's health. The leaders should be subject to incentives that align with these responsibilities, and should not be given opportunities to personally profit from activities hostile to the mission.